OxyChem, Mexichem grant final approval on new Texas ethylene cracker

The two companies will build a 1.2 billion lb/year ethylene cracker at the OxyChem complex in Ingleside, Texas, along with related pipelines and storage at Markham, Texas.

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Occidental Chemical (OxyChem) and Mexichem have officially
created a 50/50 joint venture, Ingleside Ethylene LLC, to
build a 1.2 billion lb/year capacity ethylene cracker at the
existing OxyChem plant in Ingleside, Texas, the companies
announced on Thursday.

The venture also includes associated pipelines and storage at
Markham, Texas.

As part of a long-term strategic supply relationship between
the companies, essentially all of the ethylene produced from
the cracker will be consumed in the manufacture of vinyl
chloride monomer (VCM), utilizing existing VCM capacity.

VCM will then be delivered to Mexichem to produce polyvinyl
chloride (PVC) and PVC piping systems.

The ethylene cracker will strengthen the position of
Mexichem by taking advantage of competitive energy and feedstock costs in the United States
resulting from shale gas development, said Juan Pablo del
Valle Perochena, chairman of the board for
Mexichem.

The companies began looking into the potential cracker in 2012
with the launch of a feasibility study.

OxyChem, which will build and operate the cracker, has taken a
number of relevant steps needed to begin construction, including: completed
the front-end engineering and design; received draft permits
from the Texas Commission on Environmental Quality; and applied
for US Environmental Protection Agency
permits in December 2012.

The high degree of integration between the two
companies from the wellhead through the use of VCM as a raw
material in the manufacturing PVC pipe will also create highly
competitive assets on a global basis, said Chuck
Anderson, president of OxyChem.

OxyChem expects to award the engineering and construction contract in the fourth
quarter of 2013, with construction beginning in mid-2014.
The facilities are expected to become
commercially operational in the first quarter of 2017.

OxyChem is a wholly-owned subsidiary US-based oil and gas
major Occidental Petroleum.

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